SCA AML/CFT in Capital Markets

Question 1

What does AML stand for in financial regulation?

Accepted Answer

Anti-Money Laundering

Answer

AML stands for Anti-Money Laundering — the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income through financial systems.

Question 2

What does CFT stand for in the context of AML/CFT?

Accepted Answer

Countering the Financing of Terrorism

Answer

CFT stands for Countering the Financing of Terrorism — the measures taken to prevent terrorist groups from accessing the financial system to fund their activities.

Question 3

What is money laundering?

Accepted Answer

The process of making illegally obtained money appear to come from a legitimate source

Answer

Money laundering is the process of concealing the origins of illegally obtained money (e.g., from drug trafficking, corruption) by passing it through complex sequences of banking transfers or transactions to make it appear as legitimate income.

Question 4

What are the three stages of money laundering?

Accepted Answer

Placement, layering, and integration

Answer

The three classic stages of money laundering are: Placement (introducing illegal cash into the financial system), Layering (disguising the trail through complex transactions), and Integration (reintroducing the laundered money as legitimate funds).

Question 5

What is 'customer due diligence' (CDD) in AML compliance?

Accepted Answer

The process of verifying a customer's identity, understanding their business activities, and assessing the risk they pose for money laundering

Answer

CDD involves verifying customer identity (who they are), understanding the nature of their business and the source of funds, and assessing the money laundering risk they present. It is a mandatory process for all SCA-licensed firms.

SCA Practice Test

SCA Practice Test

SCA AML/CFT in Capital Markets